So there is a magic wand after all. A revolutionary paper by the International Monetary Fund claims that one could eliminate the net public debt of the US at a stroke, and by implication do the same for Britain, Germany, Italy, or Japan.

This error is a common presumption not limited to the writings of Benes and Kumhof; the error is in these two paragraphs:

"Benes and Kumhof argue that credit-cycle trauma - caused by private money creation - dates deep into history and lies at the root of debt jubilees in the ancient religions of Mesopotian and the Middle East.

Harvest cycles led to systemic defaults thousands of years ago, with forfeiture of collateral, and concentration of wealth in the hands of lenders. These episodes were not just caused by weather, as long thought. They were amplified by the effects of credit."

The problem is not with using (mutual) credit as a basis for a monetary system, it is caused by two interactive factors.

(1)Positive interest is added to the hypothecation of the promissory note - rather than a demurrage fee. (2)The seigniorage in the credit instruments is presumed to be the property of the so-called "lending institution" rather than being vested with the people.